Alternatively, lets say we run the debt level up to 9% and all the top witnesses claiming "All is fine - nothing to see here"
I'm not on board with the equating of "This is fine!" with not switching from printing overvalued SBD (which clearly benefits Steem stakeholders since we are taking 1 STEEM from the reward pool, converting it to SBD to pay out and then selling it to someone for >1 STEEM, an immediate guaranteed profit) to instead printing STEEM (with no associated immediate gain to stakeholders). They're just not related at all.
Saying to stop printing SBD means:
- No downward pressure on SBD, so even less likely to reach the point where SBD is at or below $1 and starts getting converted, which is the only way to reduce its supply.
- More printing of STEEM and therefore more downward pressure on STEEM, exacerbating the weak STEEM price.
- No benefit pulled into the system from speculators overpaying for SBD.
Again, either way it will still be pretty clear that the SBD backing is at risk when the debt ratio is 9% and haircuts start at 10%. I just can't imagine a situation where someone sees STEEM dropping rapidly but somehow people think that "everything is fine" just because of how the payout mechanism works. It makes no sense to me at all to make the connection between those two things.
Very quickly we transition from mania to panic
You're assuming mania at 9%? Or even 5%? After STEEM has hypothetically dropped by almost 90% as it has recently?
SBD holders need to understand that SBD is backed by STEEM only to the extent that STEEM has a high enough value to do so. Haircuts (in the sense of reduced backing, but not necessarily price) are part of the deal and should come as a surprise to no one if it comes to that. If you don't like it, just sell your SBD. The premise here is overvalued SBD (otherwise it gets converted and the supply does not grow regardless of the printing rules), so anyone who wants out can not only get out, they get a premium. If you stay in you are accepting the risk of haircuts.
I know this is an old post but what do you think about the 9% full printing limit right now? If you think it's still better than 5% why do you think so? And how is it better than let's say linearly decreasing from 0% to 10%(100% SBD print rate at 0% debt, 80% at 2% debt, 30% at 7% debt, etc.) as it also eliminates the window between no-sbd-printing and haircut? Or do you think that the SBD mechanism needs to be reworked from scratch so that we actually have a reliable stablecoin on the platform? If you are for reworking the SBD backing mechanism, how would you personally design it?
#sbi-skip
I still don't think it is particularly useful to print STEEM instead of SBD. If there were some discussion about turning off or reducing printing altogether then I might be more supportive of it. Otherwise I'm fine leaving SBD printing on unconditionally. If there is too much of it, then conversions kick in and the result is STEEM put into circulation instead of SBD anyway.
SPS (which I had nothing to do with) follows this philosophy and prints SBD all the time, even under haircut conditions. What we've seen in practice is conversions keeping up and even slightly reducing the SBD supply anyway.
As far as reworking SBD, I'd like to see reverse conversions or some other way to put more SBD into circulation when it gets overvalued (which in turn ought to result in it being far less likely to ever get overvalued). Apart from STEEM itself being a basket case in terms of market reception and economics (you can't back anything with an asset that constantly drops 50%/month), that was always the main problem with SBD.
I think implementing reverse conversion shouldn't be too hard as it has been proven to be possible with the SPS account. I would like to see that too but I feel like it's pretty far low on Stinc's priority ever.
Or an entity can make a stablecoin with SMT when it comes out saving us all from the SBD shitshow altogether for reliable stablecoin.
#sbi-skip
Custodial stablecoins where you are relying on a third party to hold dollars (or whatever) can work but they have their own issues.
I mean if an entity like Tether comes to the chain why not? The real question is will any of them ever be here lol
Thank you for bothering with me replying to old post!
#sbi-skip
It's all permisionless. If Tether or anyone wants to create a custodial fiat-backed SMT, they can certainly do so. My comment was more that it wouldn't be a direct substitute for SBD, but could be an alternative. Just as we have no say over who creates an SMT we also have no say over who uses them, so if that's what people want, and there is a willing provider, they'll certainly have it.